Understanding Title Insurance
The Title Industry In Brief.
Prior to the development of the title industry in the late 1800’s, a homebuyer received a grantor’s warran- ty, attorney’s title opinion, or abstractor’s certi cate as assurance of home ownership. the buyer relied on the financial integrity of the grantor, attorney, or abstractor for protection. today, title insurance companies are regulated by state statute. they are required to post financial guarantees to ensure that any claims will be paid in a timely fashion. they also must maintain their own “title plants” which house duplicates of recorded deeds, mortgages, plats, and other pertinent county property records.
What Is Title Insurance?
Title insurance provides coverage for certain losses due to defects in the title that occurred prior to your ownership. The Seller can give only those rights that previously have been received with “good title.” title insurance protects against defects such as prior fraud or forgery that might go undetected until after closing and possibly jeopardize your ownership and investment.
Why Title Insurance Is Needed.
Title insurance assures the new buyers that they are acquiring marketable title from the Seller. It is designed to eliminate risk or loss caused by defects in title from the past. title insurance protects the interest of the mortgage lender as well as the equity of the buyer for as long as they or their heirs have any interest in the property.
When Is The Premium Due?
It is a one-time premium which is paid at the close of escrow. It is customary for the Seller to pay for the Owner’s policy. If there is a new loan, the buyer pays for the Lender’s policy. the policy has a perpetual term and provides coverage for as long as you are in a position to su er a loss.
Do All Title Companies Offer The Same Protection?
Any standard American Land title Association (ALtA) policy covers the same basic items. howev- er, First American title’s EAgLE policy (our ALtA homeowner’s policy of title Insurance*) combines the easy-to-understand plain
Language policy with additional coverages, including coverage for events happening after the policy date.**
Some examples:
- Post-policy Encroachment. The owner has been in his home for several years when a neighbor builds a patio cover on the property. We’ll provide legal defense.**
- Post-policy Forgery. Someone forges the homeowners name on a mortgage. We’ll provide legal defense.**
- Building permit violation. A room added prior to the closing date did not receive a city permit, and the new homeowner is being forced to remove the structure. We’ll pay for the removal, per policy limits.**
- Automatic Inflation Coverage of 150%, a 10% increase in the policy amount for each of the first five years.
* An ALtA homeowners title Insurance policy is requested in Line 117 of the revised AAR Residential Resale Real Estate purchase Contract, 5/00.
** deductibles, maximums, and conditions may apply.
